SWITZERLAND - Publica, Switzerland's largest pension fund, has welcomed as "very respectable" a return of 1.71% for last year, placing capital growth above the country's new minimum interest rate of 1.5%.

In a statement, it said: "The crash in financial markets seen over the summer of 2011 did not pass over Pubica without leaving its mark."

However, it insisted that, in light of the volatile market environment, returns should be seen as positive.

To substantiate its claims, the CHF33bn (€27bn) scheme compared its return with that of the Pensionskasse for banking group Pictet, which, with equity exposure of 25%, 40% and 60% in respective portfolios, saw returns varying between 1.63% and -2.48%.

"Even compared to its own strategy benchmark, Publica achieved an outperformance of 0.52 percentage points," it said.

Despite returns only outperforming the country's Mindeszins - the minimum interest rate for second-pillar funds set by government - by 0.21 percentage points, Publica still saw a slight increase in its coverage ratio, rising from 101.9% at the end of June last year to 103%.

While preliminary results predict a further rise, fuelled by strengthening equity markets, to 106%, at the end of December, it was still behind year-end 2010's coverage ratio of 104.9%.

However, Publica fared better than the average Swiss pension fund, which, according to Swisscanto's Pensionskassen-Monitor, saw funding levels increase to 97% at the end of last year, with the average return standing only at 0.1%.

Last week also saw first-pillar scheme AHV report a return of 1.5%.